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Farmers shop for the upcoming Spring Festival in a market in Sichuan province, Jan. 28, 2010. China is trying to step up efforts to stimulate rural consumption as a way to drive domestic demand.AP Photo

"China's Century is Not Yet upon Us"

China's current reputation for power benefits from projections about the future. Some young Chinese use these projections to demand a greater share of power now, and some Americans urge preparation for a coming conflict similar to that between Germany and Britain a century ago.

One should be sceptical about such projections. By 1900, Germany had surpassed Britain in industrial power, and the Kaiser was pursuing an adventurous foreign policy that was bound to bring about a clash with the other great powers. By contrast, China still lags far behind the US economically and militarily, and has focused its policies primarily on its region and on its economic development. While its "market Leninist" economic model (the so-called "Beijing Consensus") provides soft power in authoritarian countries, it has the opposite effect in many democracies.

Even if Chinese gross domestic product passes that of the US in about 2030 (as Goldman Sachs projects), the two economies would be equivalent in size, but not equal in composition. China would still have a vast underdeveloped countryside and it will begin to face demographic problems from the delayed effects of its one-child policy. Moreover, as countries develop, there is a tendency for growth rates to slow. Assuming Chinese growth of 6 per cent and American growth of only 2 per cent after 2030, China would not equal the US in per capita income until sometime in the second half of the century.

Per capita income provides a measure of the sophistication of an economy. While China's impressive growth rate combined with the size of its population will surely lead it to pass the US economy in total size, that is not the same as equality. And since the US is unlikely to be standing still during that period, China is a long way from posing the kind of challenge to America that the Kaiser's Germany posed when it passed Britain at the start of the last century. Nonetheless, the rise of China recalls Thucydides' warning that belief in the inevitability of conflict can become one of its main causes.

During the past decade, China moved from being the ninth-largest exporter to the largest in the world, but China's export-led development model will probably need to be adjusted as global trade and financial balances become more contentious in the aftermath of the financial crisis. Although China holds huge foreign currency reserves, it will have difficulty raising its financial leverage by lending overseas in its own currency until it has deep and open financial markets in which interest rates are set by the market, not the government.

Unlike India, which was born with a democratic constitution, China has not yet found a way to solve the problem of demands for political participation (if not democracy) that tend to accompany rising per capita income. The ideology of communism is long gone, and the legitimacy of the ruling party depends upon economic growth and ethnic Han nationalism. Some experts argue that the Chinese political system lacks legitimacy, suffers from a high level of corruption and is vulnerable to political unrest should the economy falter. Whether China can develop a formula that can manage an expanding urban middle class, regional inequality and resentment among ethnic minorities remains to be seen. The basic point is that no one, including Chinese leaders, knows how the country's political future will evolve and how that will affect its economic growth.

In 1974, Deng Xiaoping told the United Nations General Assembly: "China is not a superpower, nor will it ever seek to be one." The current generation of Chinese leaders, realising that rapid growth is the key to domestic political stability, has focused on economic development and what they call a "harmonious" international environment that will not disrupt their growth. But generations change, power often creates hubris and appetites sometimes grow with eating. Some analysts warn that rising powers invariably use their newfound economic strength for wider political, cultural and military ends.

Even if this were an accurate assessment of Chinese intentions, it is doubtful that China will have the military capability to make this scenario possible. Asia has its own internal balance of powers and, in that context, many states welcome a US presence in the region. Chinese leaders will have to contend with the reactions of other countries as well as the constraints created by their own goal of growth and the need for external markets and resources. Too aggressive a military posture could produce a countervailing coalition among its neighbours that would weaken both its hard and soft power. A recent Pew poll of 16 countries found a positive attitude towards China's economic rise, but not its military rise.

The fact that China is not likely to become a peer competitor to the US on a global basis does not mean that it could not challenge the US in Asia, and the dangers of conflict can never be ruled out. But Bill Clinton was basically right when he told Jiang Zemin in 1995 that the US has more to fear from a weak China than a strong China. Given the global challenges that China and the US face, they have much to gain from working together. But hubris and nationalism among some Chinese, and unnecessary fear of decline among some Americans make it difficult to assure this future.

Joseph Nye is Sultan of Oman Professor of International Relations and former Dean of the Harvard Kennedy School. The views expressed in this article are his own.

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